Stocks Sharply Higher on a Better-Than-Expected US May Payroll Report

The S&P 500 Index ($SPX) (SPY) today is up +1.23%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +1.34%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.23%.  June E-mini S&P futures (ESM25) are up +1.29%, and June E-mini Nasdaq futures (NQM25) are up +1.30%. 

Stock indexes today are sharply higher, with the S&P 500 posting a 3-1/2 month high and the Dow Jones Industrials posting a 3-month high. Tesla is up more than +4% today, leading technology stocks higher after plunging -14% on Thursday when President Trump proposed ending government contracts and subsidies for Elon Musk's companies.  Shares of Tesla recovered today when Musk, who triggered the public feud by criticizing President Trump's tax bill, signaled he's keen to dial down the hostility.  

Stock indexes added to their gains today after the better-than-expected US May employment report eased concerns that the US labor market was slowing.  Also, comments from US trade adviser Navarro boosted stocks when he said a meeting with China is expected in seven days. 

US May nonfarm payrolls rose +139,000, stronger than expectations of +126,000, although Apr nonfarm payrolls were revised lower to +147,000 from the previously reported +177,000.  The May unemployment rate remained unchanged at 4.2%, right on expectations.

US May average hourly earnings rose +0.4% m/m and +3.9% y/y, stronger than expectations of +0.3% m/m and +3.7% y/y.

The markets are discounting the chances at 0% for a -25 bp rate cut at the next FOMC meeting on June 17-18.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.32%.  China's Shanghai Composite rose to a 2-week high and closed up +0.04%.  Japan's Nikkei Stock 225 closed up +0.50%.

Interest Rates

September 10-year T-notes (ZNU25) today are down -18 ticks.  The 10-year T-note yield is up +7.1 bp to 4.462%.  Sep T-notes today gave up early gains and turned lower on the hawkish US May payroll report that showed a larger-than-expected increase in nonfarm payrolls and a larger-than-expected increase in average hourly earnings.  T-notes today initially posted modest gains on carryover strength from a rally in 10-year German bunds.   

European government bond yields today are mixed.  The 10-year German bund yield is down -1.8 bp to 2.565%. The 10-year UK gilt yield is up +2.4 bp to 4.640%.

Eurozone Q1 GDP was revised higher to +0.6% q/q and +1.5% y/, stronger than expectations of +0.4% q/q and +1.2% y/y.

Eurozone Apr retail sales rose +0.1% m/m, weaker than expectations of +0.2% m/m.

German Apr industrial production fell -1.4% m/m, weaker than expectations of -1.0% m/m.

ECB Governing Council member Stournaras said, "The bar for another ECB rate cut is high, in July and beyond," and the ECB should pause its interest rate cuts to give officials a chance to assess recent shocks, particularly from trade.

Swaps are discounting the chances at 26% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

Chip makers are rallying today to boost the broader market. Micron Technology (MU) and Marvell Technology (MRVL) are up more than +3%.  Also, Applied Materials (AMAT), ARM Holdings Plc (ARM), GlobalFoundries (GFS), and KLA Corp (KLAC) are up more than +2%.  In addition, Intel (INTC), Advanced Micro Devices (AMD), ON Semiconductor (ON), Semiconductors NV (NXPI), and Qualcomm (QCOM) are up more than -1%.   

Strength in the Magnificent Seven stocks is a positive factor for the overall market.  Nvidia (NVDA), Amazon.com (AMZN), Meta Platforms (META), and Alphabet (GOOGL) are up more than +2%.  Also, Apple (AAPL) is up more than +1%, and Microsoft (MSFT) is up +0.94%.

Tesla (TSLA) is up more than +4% to lead gainers in the S&P 500 and Nasdaq 100 after CEO Musk signaled he would cool tensions with President Trump following Thursday's dispute that sank Tesla stock by more than -14% when Musk called for Trump's impeachment and President Trump proposed ending government contracts and subsidies for Elon Musk's companies. 

Quanex Building Products (NX) is up more than +23% after reporting Q2 net sales of $452.5 million, stronger than the consensus of $439.3 million.

QXO Inc (QXO) is up more than +14% after Wolfe Research initiated coverage on the stock with a recommendation of outperform and a price target of $44. 

Sarepta Therapeutics (SRPT) is up more than +6% after Scotiabank upgraded the stock to sector outperform from sector perform with a price target of $80. 

Lululemon Athletica (LULU) is down more than -18% to lead losers in the S&P 500 and Nasdaq 100 after cutting its full-year EPS estimate to $14.58-$14.78 from a previous estimate of $14.95-$15.15. 

Docusign (DOCU) is down more than -17% after reporting Q1 billings of $739.6 million, below the consensus of $746.4 billion, and cutting its full-year billings forecast to $3.29 billion-$3.34 billion from a previous forecast of $3.30 billion-$3.35 billion, weaker than the consensus of $3.32 billion.

Vera Therapeutics (VERA) is down more than -27% after Japanese rival Otsuka gave results from a trial of its experimental therapy for kidney disease that was better than Vera's data. 

MercadoLibre (MELI) is down more than -5% after Citigroup opened a 30-day downside catalyst watch on the stock, citing the potential risk the company is taking to improve pricing and preserve market share.

Mosaic (MOS) is down more than -4% after cutting its Q2 phosphates sales volume forecast to 1.5 million to 1.6 million tons from a previous forecast of 1.7 million to 1.9 million tons, well below the consensus of 1.84 million tons. 

ServiceTitan (TTAN) is down more than -7% after reporting a Q1 loss per share of -51 cents, wider than the consensus of -37 cents. 

Broadcom (AVGO) is down more than -2% despite reporting better-than-expected Q2 earnings after analysts' said its future forecast isn't seen as strong enough to extend the stock's recent strength. 

Earnings Reports (6/6/2025)

ABM Industries Inc (ABM), FuelCell Energy Inc (FCEL), G-III Apparel Group Ltd (GIII), Virco Mfg. Corp (VIRC).